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MLB charging $2+ Mil for fantasy baseball licenses?

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Postby JTWood » Fri Feb 17, 2006 12:42 am

01/30/2006: Is the concept of intellectual property getting out of hand?

Maybe it's not as over the top as the RIAA's position, suing grandmothers for music piracy (for that matter, even suing deceased grandmothers if this story is to be believed). But over at The Hardball Times Maury Brown is examines the agreement between Major League Baseball Advanced Media (MLBAM) and the Major League Baseball Players Association (MLBPA). Reduced to its essentials, what this agreement does is assert ownership, by players (represented for these purposes by the MLBPA), of the association between player identities and the statistics that those players generate during the season and granting to MLBAM the exclusive license to regulate (via the grant of sublicenses) the use of associated player identities and statistics for the purposes of the creation of online games, online content, and and wireless applications. The target, of course, is fantasy baseball leagues:

On Jan. 19, 2005, MLB Advanced Media and the MLB Players Association announced a historic agreement via press release:

The five-year agreement, valued in excess of $50 million, extends beyond the
expiration of the current collective bargaining agreement between Major
League Baseball and the MLBPA. It provides MLBAM the exclusive rights to use,
and to sublicense to others, Major League Baseball player group rights for
the development and creation of on-line games, all other online content,
including fantasy baseball and interactive games, as well as all wireless
applications including cell-phone enabled games.

The announcement sent shockwaves through the fantasy sports industry.

The reason, of course, being that the entire industry then becomes dependent on MLBAM for its very ability to exist (something which, if sustained, might put a crimp in quite a few fantasy baseball leagues in coming seasons).

But the agreement relates to an even more basic legal question:

Needless to say, not all within the fantasy sport industry agree with the sentiment of the MLBAM and the MLBPA. At its core, this agreement has set off a firestorm of debate:

Who owns player statistics?

Past precedent suggests that there really is no such thing as ownership of player statistics; basically, player statistics are in the nature of historical fact, and therefore can't be "owned" by anyone:

In [the] favor [of a party presently litigating the validity of the MLBPA/MLBAM agreement] is the 2001 case Gionfriddo v. Major League Baseball, 94 Cal. App. 4th 400 - (file type: PDF), in which former players Al Gionfriddo, Pete Coscarart, Dolph Camilli, and Frankie Crosetti, sued MLB for printing their names and stats in game programs, claiming their rights to publicity were violated prior to 1947. The standard players contract within the Basic Agreement has since been revised to read:

[3.] (c) The Player agrees that his picture may be taken for still
photographs, motion pictures or television at such times as the Club may
designate and agrees that all rights in such pictures shall belong to the
Club and may be used by the Club for publicity purposes in any manner it
desires.

The court, however, held that the names and statistics of the players were historical facts, and therefore, part of baseball history. MLB was, therefore, allowed to use them. This case may set precedent for the ... case.

What interests me is the phrasing of the agreement, though:

The five-year agreement, valued in excess of $50 million, extends beyond the
expiration of the current collective bargaining agreement between Major
League Baseball and the MLBPA. It provides MLBAM the exclusive rights to use,
and to sublicense to others, Major League Baseball player group rights for
the development and creation of on-line games, all other online content,
including fantasy baseball and interactive games, as well as all wireless
applications including cell-phone enabled games.

[emphasis added --LRC]

Interpreted literally, the emphasized language doesn't just require that fantasy league owners get a license from MLBAM. It would also seem to apply to online statistical sites like Baseball Reference, or perhaps even to online distribution of stand-alone data files like the Lahman database.

The litigation I mentioned before, challenging the MLBAM/MLBPA agreement, is CBC Distribution and Marketing, Inc. v. Major League Baseball Advanced Media, L.P. (PDF file), and is currently pending before the United States District Court, Eastern District of Missouri. It's an action for declaratory judgement in four counts. Count I asks for a declaratory judgement that CBC's business doesn't violate the Lanham Act (in this context, the Lanham Act forbids CBC from making false or misleading declarations or representations of fact which would serve to mislead or confuse CBC's customers that they are affiliated with or sponsored by Major League Baseball). Count II asks for a declaratory judgement that CBC's activities do not infringe any copyrights owned by Major League Baseball. Count III asks for a declaratory judgement that CBC's activities do not infringe any rights of publicity owned or controlled by Major League Baseball. Count IV asks for a declaratory judgement that CBC is not violating any state unfair competition or false advertising laws.

It'll be an interesting case to keep an eye on (Maury says it's scheduled for trial around about the time of the All-Star break). What fascinates me is the setup of the agreement: the agreement between MLBAM and MLBPA in effect asserts a property right in the association between the player's identity (his name, team affiliation and uniform number) and the statistics he generates:

It's not the use of the statistics, in and of themselves, that is at issue, but rather using stats in conjunction with a player's name or player number and team that is at the heart of the intellectual property debate.

In that sense it's a clever way of killing the golden goose: You can use the stats all you want, but stats without the ability to associate them to a player is nothing more than a collection of numbers that serves no purpose in a fantasy league format. For that purpose, the new agreement brokered by the MLBPA and MLBAM requires that a business be licensed to do so—for a fee.

What's ingenious about this agreement is that it's long been recognized that the commercial use of player identities (pictures, player names and uniform numbers) is a property right owned by the player (though, with a few exceptions--right now the one that immediately leaps to mind is Barry Bonds--players, as members of MLBPA grant MLBPA the authority to act as their agents with respect to licensing their likeness, names and uniform numbers for commercial use).

If the practice in the computer and board gaming industries is any sort of precedent, I'm not sanguine about CBC's prospects in getting the declaratory relief they want. If a computer game developer wants to make her computer baseball game more realistic by using team names and logos in the game, she has to get a license from Major League Baseball (I assume that MLBAM is now the entity that acts as MLB's agent in this regard). If not, she can place her computer teams in the same cities as the cities which have major league franchises, but she can't use the official team names or logos. If she wants to make her computer baseball game more realistic by using actual player identities in the game (perhaps using player pictures, labeling the various computer players with actual player names and uniform numbers, and perhaps using the real players' historical statistics to drive the simulation engine), she has to get a license for the players' identities from MLBPA as agent for the players. If not, she can use players' historical statistics in her game, but she can't use real player names nor associate those names with their real statistics.

Given that history, it's not a wild leap of legal fancy to conclude that the player has a property right in his identity, which (illustrated by the practice in the computer gaming field) is associated with his statistics in such a way that the player must issue a license to anyone wishing to exploit that association commercially. If the player owns that property right, then he can legally appoint MLBPA as his agent for managing the licensing of that right (and, as I noted, most players do so appoint MLBPA for that purpose). And MLBPA, it its agreement with MLBAM, has basically issued a license to MLBAM to "manage" the commercial exploitation of the player's property rights by sublicensing them.

Based on the factual allegations of CBC's petition for declaratory relief, it looks to me (barring some legal precedent I'm not aware of) that they're not going to prevail. The facts alleged by CBC in their petition note that prior to the MLBAM/MLBPA agreement they had in fact licensed the right to use of player identities from the MLBPA:

CBC had formerly entered into a licensing agreement with the Major League Baseball Players Association, covering, inter alia, rights to names, nicknames, numbers, likenesses, signatures, pictures, playing records and biographical data.
Paragraph 15, Complaint for Declaratory Judgment, CBC Distribution and Marketing, Inc. v. Major League Advanced Media, L.P., U.S. District Court (E.D.Mo), pending

About the only thing that might save them is an assertion of First Amendment rights--that CBC's use of "real time" player statistics is analogous to (and deserving of the same Constitutional protection as) a newspaper's or news website's publication of player statistics during the championship season.

Somewhat far fetched (after all, the Bill of Rights only applies to government action, and Major League Baseball and its associated entities isn't the government), but the law has seen stranger decisions....
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Postby glcmustliveon » Fri Feb 17, 2006 2:03 am

Even though Im biased seeing how i love fantasy baseball, but it seems so short sighted for MLB to try and charge people for using their stats. Fantasy baseball, and fantasy sports for that matter, is the only reason why I would watch a bad baseball matchup, (See TB 2004), So in closing MLB should thank fantasy hosts because they would lose tons of TV revenue without it...
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Postby Matthias » Fri Feb 17, 2006 8:34 am

glcmustliveon wrote:Even though Im biased seeing how i love fantasy baseball, but it seems so short sighted for MLB to try and charge people for using their stats. Fantasy baseball, and fantasy sports for that matter, is the only reason why I would watch a bad baseball matchup, (See TB 2004), So in closing MLB should thank fantasy hosts because they would lose tons of TV revenue without it...


Again, that's the argument of Yoda and everyone who got their undies in a bunch over Napster 5 years ago.

And JTWood, thanks for posting those summaries. Pretty much what I've been saying throughout. Although I would predict, in litigation, CDC will lose as it is pure commercial speech.
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Postby theclefe » Fri Feb 17, 2006 8:56 am

This, combined with the Video Game exclusive licensing deal, is the MLB stretching too far to make an extra buck.

$2 million is pennies to yahoo, but it is also pennies to MLB. What benefits could come with wiping out small, and often more innovating competition? It is a trend that can only hurt their fans' experience in the long run. I don't think they shouldn't profit, but this isn't a campaign for profit. It is a campaign for control, which will inevitably led to stale, cookie-cutter games.
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Postby Matthias » Fri Feb 17, 2006 11:06 am

theclefe wrote:It is a campaign for control


This is probably the most accurate assessment that's been put out there. In reality, MLB probably isn't really after the $2MM per league. It is looking for a court case to settle the ownership issues. And once the dust clears and the IP is clearly defined, then MLB may start getting creative and offering royalty-based or a lower base amount plus royalty licensing.
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Postby koufax57 » Fri Feb 17, 2006 11:41 am

The bottom line: If the Cafe were to decide to set up a bunch of fantasy leagues so that all of us could compete against each other (which would be cool), and charged a fee to cover costs, plus a little bit extra for their efforts, MLBAM could legitimately swoop in and shut it down.

Not saying that it would be worth their effort to do so, but given the stance they are taking, it would be well within their rights to do so.

Tell me how that strengthens the fantasy baseball industry. Tell me how that makes any logical sense.

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Postby Yoda » Fri Feb 17, 2006 11:55 am

Matthias wrote:
glcmustliveon wrote:Even though Im biased seeing how i love fantasy baseball, but it seems so short sighted for MLB to try and charge people for using their stats. Fantasy baseball, and fantasy sports for that matter, is the only reason why I would watch a bad baseball matchup, (See TB 2004), So in closing MLB should thank fantasy hosts because they would lose tons of TV revenue without it...


Again, that's the argument of Yoda and everyone who got their undies in a bunch over Napster 5 years ago.

And JTWood, thanks for posting those summaries. Pretty much what I've been saying throughout. Although I would predict, in litigation, CDC will lose as it is pure commercial speech.


Matthias, did you bump your head or something? I'm sorry that you are so confused. I never used Napster and I paid for every piece of music, movies I own in my house.

So you can go pound sand or try to be the spokesperson for MLB without getting paid from them. Thanks.
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Postby Yoda » Fri Feb 17, 2006 12:05 pm

GotowarMissAgnes wrote:
Yoda wrote:What MLB is trying to do is charge for somthing that wasn't charged before. It is equivalent to trying to charge people for sending an email.


That's a great idea. Maybe then people would think before they send out that 8,000 useless email for the day.


There is this thing called spam blocker now. Also try gmail. You won't get 8,000 useless emails every day.
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Postby Matthias » Fri Feb 17, 2006 12:25 pm

Yoda wrote:
Matthias wrote:
glcmustliveon wrote:Even though Im biased seeing how i love fantasy baseball, but it seems so short sighted for MLB to try and charge people for using their stats. Fantasy baseball, and fantasy sports for that matter, is the only reason why I would watch a bad baseball matchup, (See TB 2004), So in closing MLB should thank fantasy hosts because they would lose tons of TV revenue without it...


Again, that's the argument of Yoda and everyone who got their undies in a bunch over Napster 5 years ago.

And JTWood, thanks for posting those summaries. Pretty much what I've been saying throughout. Although I would predict, in litigation, CDC will lose as it is pure commercial speech.


Matthias, did you bump your head or something? I'm sorry that you are so confused. I never used Napster and I paid for every piece of music, movies I own in my house.

So you can go pound sand or try to be the spokesperson for MLB without getting paid from them. Thanks.


Ok. Let me break it down for you.

(1) This free product makes me more interested in the underlying product as a whole.
(2) Source of the product decides to charge for this previously free product.
(3) Charging me for this previously-free product is stupid because it is going to make me less interested in the underlying product and ulimately make the industry less profitable.

Those three points were made by you in reference to fantasy baseball and made by many others in reference to Napster and downloadable music. I'm not saying you are or ever were a huge Napster music pirate. I'm saying you're making the same structured argument. Get it?

And if you're so proud that you own paid for every piece of music and every movie in your house, then you should also be proud to properly license from Major League Baseball the use of their player's likenesses and team names.

I'm not the spokesperson for MLB; just the spokesperson of reason.
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Postby Yoda » Fri Feb 17, 2006 12:54 pm

Matthias wrote:
Yoda wrote:
Matthias wrote:
glcmustliveon wrote:Even though Im biased seeing how i love fantasy baseball, but it seems so short sighted for MLB to try and charge people for using their stats. Fantasy baseball, and fantasy sports for that matter, is the only reason why I would watch a bad baseball matchup, (See TB 2004), So in closing MLB should thank fantasy hosts because they would lose tons of TV revenue without it...


Again, that's the argument of Yoda and everyone who got their undies in a bunch over Napster 5 years ago.

And JTWood, thanks for posting those summaries. Pretty much what I've been saying throughout. Although I would predict, in litigation, CDC will lose as it is pure commercial speech.


Matthias, did you bump your head or something? I'm sorry that you are so confused. I never used Napster and I paid for every piece of music, movies I own in my house.

So you can go pound sand or try to be the spokesperson for MLB without getting paid from them. Thanks.


Ok. Let me break it down for you.

(1) This free product makes me more interested in the underlying product as a whole.
(2) Source of the product decides to charge for this previously free product.
(3) Charging me for this previously-free product is stupid because it is going to make me less interested in the underlying product and ulimately make the industry less profitable.

Those three points were made by you in reference to fantasy baseball and made by many others in reference to Napster and downloadable music. I'm not saying you are or ever were a huge Napster music pirate. I'm saying you're making the same structured argument. Get it?

And if you're so proud that you own paid for every piece of music and every movie in your house, then you should also be proud to properly license from Major League Baseball the use of their player's likenesses and team names.

I'm not the spokesperson for MLB; just the spokesperson of reason.


lol too funny.
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